Tackling Call Center Infrastructure Challenges

Developing a cost-effective call center solution that dynamically fits the customer care needs of an organization has become a growing challenge. Traditional on-premise call centers as well as standard outsourcing services often show poor return on investment (ROI), in large part due to costly infrastructure issues.

It is not unusual to find call centers running their telecom and data infrastructure assets at a mere fraction of their capacity, due to ongoing changes in the business environment and the unpredictable duration of the customer contract life all contribute to this. In fact, sudden cancellations of the service contract with call centers operators have become common. According to Everest Consulting Group, more than 50 percent of recently signed outsourcing contracts were five years or shorter.

As business priorities shift over time, it is often difficult to realign telecom and data infrastructure resources to those shifting priorities. The speed and unpredictability of recent business cycles, combined with costly technology upgrade cycles, have pushed many enterprises to the limit of manageability and profitability.

The telecom and data infrastructure, servers, and switches are purchased and usually configured for peak traffic flow that is rarely, if ever, utilized. Many call centers overspend on hardware and software, never to recover their capital investment for excess capacity. Worse yet, they continue to support maintenance and upgrade costs for an asset that underperforms from a revenue perspective.

This “peak-traffic” approach has driven up costs, cut into operating margins and created an overall financial drag on the entire call center industry, estimated at about 100,000 call centers worldwide. Faced with tight budget constraints and stretched operating budgets, every business is looking to cut the initial capital investment and recurring operating costs of the call center. In addition, the industry needs to improve the call center utilization capacity, while maintaining an acceptable level of customer service. This underutilized capacity environment along with the advancement of technology has created the birth for the IP hosted call center.

Hosted Call Centers

During last two to three years, IP Hosted solutions that use one common network for voice and data services have been introduced in the market place. This approach has addressed the capacity utilization, network efficiency, and related financial recovery problem. According to Datamonitor, a leading contact center market research firm, there will be 138,000 hosted agent positions globally by the end of 2005 growing to a projected 463,000 positions by 2008.

The migration from the premise-based infrastructure to the IP hosted model is in fact accelerating rapidly. Further, a number of legacy hosted call centers are migrating to the IP Hosted solution rather than upgrading the existing system. There are compelling financial and technical reasons why a number of call centers are now interested in the IP hosted solution. And while there are still some applications where the premise-based solution will be financially and technically attractive rather than leasing port connections, a hybrid of the IP hosted solution and the premise-based solution is emerging as an attractive alternative.

According to a recent study by Frost & Sullivan, there are a number of factors leading to the shift to IP infrastructure. Cost and easier Network Management were the top drivers to emerge. In terms of specific applications, the ability to deploy remote agents was a driving force. The popularity of IP telephony is growing steadily as an increasing numbers of companies realize telecommunication cost savings and enhanced productivity benefits.

Customer Benefits

With the IP hosted model, call center operators can save their capital investment in

purchasing, operating and maintaining telecom and data infrastructure. But not all On-Demand IP hosted solutions are created equally. In fact, there are two pricing models that call center operators should consider. The first and more common require fixed monthly payments for each agent seat — in other words a set minimum fee paid to the service provider regardless of agent use. This oddly nearly resembles the ‘peak-traffic flow’ approach with little flexibility for down cycles and low usage phases. Marketing campaigns are often cyclical and to maximize the call center investment, operators should have the scalability in pricing to accommodate both peak-traffic as well as less active marketing phases.

That leads to the second pricing model, based solely on a unit of usage -- with no fixed monthly charges. The call center is simply charged for minutes used by each agent. Fees are charged according to application use as well, including support for live agents, Webchat or predictive dialing. This model provides for financial predictability that maps closely to revenue. It is completely transparent as usage-based pricing is clearly defined. There are ‘no expenses’ if there is ‘no business.’

Call centers suddenly have the flexibility to ramp up for aggressive outbound campaigns, perhaps leading into the December holiday season, or dial down efforts during slow cycles, such as the sluggish summer months. This provides true ‘On-Demand’ pricing that matched the ‘On-Demand’ hosted service. Unfortunately, most service providers do not offer this pricing model, opting for lucrative minimum set fees instead.

Further, call center operators can focus on their core competencies rather than ancillary processes such as infrastructure capacity utilization or fixed monthly payments. Inbound and outbound service applications within the call center outsourcing market are quickly maturing and considered by many now to be a commodity business. In fact, many purchases of call center services are now significantly driven on cost alone. For the traditional approach of the fixed-cost model, customers are still paying for services whether they use resources or not. With the usage-based model, customers pay only for the telecom and bandwidth processing and applications that they use. This allows call center operators to always maintain a positive operating margin for services provided, since there are no financial variances.

This pricing model provides for a future where customers never have to buy hardware or software again and serves all customer needs regardless of agent seat requirements at any time, anywhere. The advantages include:

• No hardware acquisition or follow-up costs (technology is refreshed by service provider without the buyer paying for it)
• No software licenses or upgrades to manage
• No facilities to purchase or lease
• No maintenance or support staff
• No capital costs (capital avoidance)
• Full scalability (empowering customers to tap in and take advantage of vast traditional and IP network resources at any time any where in world.)

And with the pay-per-use pricing (not offered by most service providers)

• No fixed monthly expenses for true ‘On-Demand’ pricing that matches the ‘On-Demand’ service

Benefits Breakdown

There are three benefits to consider in an IP hosted solution.

1. Flexibility to meet variable business needs
2. Highest quality at the lowest cost
3. Investment protection

1. Flexibility to meet variable business needs

An IP hosted call center delivers a flexible, resilient operational infrastructure. It addresses rapid fluctuations in customer demands and needs. Also, it instantaneously accesses the network and data resources to sense and respond to shifting needs. It provides required capacity for high-demand applications and reduces cycle times. Further, agents can work from almost anywhere, enabling a “virtual” call center.

2. Highest quality at the lowest cost

The IP hosted call center solution delivers significant capital investment and operational cost reductions for equipment such as servers, switches, and infrastructure. The IP network provides high reliability, security and uptime.

3. Investment Protection

IP hosted call center services can help to improve optimal utilization of networking capacity and capabilities. They can help to avoid common pitfalls of over-provisioning and incurring excess costs. And they can free IT organizations from the burden of administering disparate, non-integrated systems. Call center operators can take advantage of service provider’s extensive current and future investments. Let the service provider refresh technology, as long as the buyer is not paying for it.

The Move to IP Hosted Call Centers

Volatility is a permanent feature of business life. The contract life for outsourcing and offshoring services is limited and unpredictable. Businesses have to develop more adaptive techniques to create “real” values, no matter how unstable the economic environment may be. Call center operators have to manage growing delivery speed and uncertainty of business changes.

Through the IP hosted model, call centers can be started with a small number of seats. As a call center decommissions old premise based systems according to their business needs, it can add new capacity into the network and move more agents on the IP hosted system. Over time, the complexity of telecom and data infrastructure will drop and financial benefits will multiply further.

The IP hosted solution provides short-term and long-term benefits to the entire call center industry. Businesses can begin to adopt IP hosted network technologies with no initial investment, zero service disruption anddemonstrable ROI. The emerging IP hosted industry will continue to place contact centers on the path to even longer term benefits as telecom and data network evolves and matures.

Kent Charugundla is CEO and Founder of the EagleNet group of companies, including EagleACD. He can be reached at ksc@eagle.net. EagleACD